We’re nearing the end of the Christmas season.  Did you stress about money?  Are you dreading your upcoming credit card bills?  Want to be in a better financial position next Christmas?

You can be in a completely different financial situation by next Christmas.  Imagine not being burdened by Christmas expenses before or after the holidays.  Think about how nice it will be to just enjoy the season and spend time with loved ones without being overwhelmed by money stress.

I’m going to share with you 3 things you can do now that will put you in a better position financially for next Christmas.

1- Calculate your total Christmas spending from this year

While Christmas is still fresh, go through all of your receipts and think back on everything Christmas-related that you spent money on.  Add it all up to find out how much you spend on Christmas this year.

Here are some categories you’ll want to be sure to include:

  • Christmas cards— Include price of cards and postage
  • Travel— Driving to Grandma’s house? Flying to New York? Staying in hotels and eating on the road? Include all expenses for your trips
  • Gifts— Who did you buy presents for? Immediate family, extended family, neighbors, teachers, friends, bosses, co-workers? Include:
    • Stocking stuffers
    • Wrapping supplies
    • Mailing gifts
  • Holiday Treats— For your family and to share
  • Food— Are you hosting a meal or attending a holiday potluck?  Do you go to a certain restaurant every Christmas Eve?
  • Decorations— Be sure to include the tree if that’s an annual expense
  • Charitable Giving— What special giving do you do during the holidays?
  • Other— Does your family have another tradition that involves an expense?  Maybe you go see the Nutcracker or ride the Polar Express.

When you’ve written down an exhaustive list of spending in each category, add everything up to get a grand total for Christmas spending.

This might sound tedious. You might feel buyer’s remorse.  You might think that you really don’t want to know how much you spent.  And you might be shocked when you see how much you really spend on Christmas! But knowing how much you spent is important for making a plan and being prepared for next year.

2-Make a plan for next year

Now that you know how much you spent on this year’s Christmas, it’s time to make plans for how much you want to spend next year.  Would you like next year’s Christmas to look the same as this year’s as far as spending goes?  Do you plan to scale back?  Or do you want to have a bigger budget to work with?

There’s not a right answer.  It’s completely up to you– it’s your holiday and your money.  Make any adjustments to your Christmas plans for next year and come up with a dollar amount for next year’s Christmas budget.

Now that you know how much your Christmas budget will be, we need to make a plan to come up with that amount of money.

–I think the easiest way to do it is to just take the total, divide by 12 and budget that amount in each month.  You don’t have to do it like that though.

–You could set aside a certain amount out of every paycheck.

–Maybe some months you get an additional paycheck (like when a month has 5 Fridays) and you decide that your Christmas fund will come from one of those paychecks.

–If you’re a cash user you could even do one of those $5 challenges where you save every $5 bill that you get.  Do what works best for you, but make a plan.

Decide where you’re going to keep your Christmas fund.

–You could get a free saving account that you transfer money into.  One of my blog readers, Rebecca, said that her bank offers a “Christmas Club” for this purpose.

–If you use budgeting software like YNAB that acts like a digital envelope system, then you can just leave the money in your checking account.  Since you spend according to budget category balances instead of your checking account balance you won’t accidentally spend that money that’s earmarked for Christmas.

–If you’re a cash envelope user, you could have a cash envelope designated for your Christmas money.  You could even have a wrapped Christmas gift box where you stash all of those $5 bills!

3- Start tracking your expenses

When you first start budgeting it’s hard to know how much money to allocate to each category.  If you haven’t been tracking your expenses you might not have any idea how much you’ve been spending in each category.

Not only will you set a better budget when you know how much you spend, you’ll also become much more aware of each and every time you spend money.  You’ll see how all of the little expenses add up. Sometimes you’ll find that what your spending money on is completely unrelated to what you think your actual priorities are! Knowing where your money is going is the only way to start making more intentional decisions about how you spend.

Much like tracking food intake when you’re on a diet, tracking your spending makes you hyper aware THAT you are spending.  Knowing you’ll have to write the expense down may prevent you from making it, or at least  make you think about it before you make the purchase.

Join the Frugal Fresh Start Challenge

We’ll talk more about tracking expenses, budgeting, and improving your finances in the Frugal Fresh Start Challenge.  When you sign up for the challenge, you can download the free workbook.

I’m so excited for you to get your finances in a better place for next Christmas.  I’m excited for you to be able to relax and enjoy the special season without the financial stress you may have felt in the past.

Making big changes won’t be easy.  It will take discipline to create new habits.  You’ll have to make sacrifices.  But staying in the same place you’re at right now? That might not be easy either.

I hope you’re feeling hopeful.  You can make huge financial strides between now and next Christmas.  You’ve got this!


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